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Sir,
Why did Bank needs a guarantor ,when the other party to the contract is also mortgaging his property with the bank (the value of which is even more than the loan amt)/
Replies (1)
I guess its like an added security.
A property eventhough mortgaged, is always vulnerable to unpredicable forces of nature. A small earthquake can turn a tall & sturdy building into rubbles in less than a minute, in which case, the bank's security suddenly ceases to exist. The guarentee is required to compensate such situations.
Anyways, the guarantee will not invoked unless there is some default in repayments.
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